After reading On Payment of Plan Proceeds, read also How may a Planholder terminate his Pre-Need Plan?
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No pre-need company shall refuse, without just cause to pay or settle claims arising under coverages provided by its plans
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In case of scheduled benefit plans, the proceeds of the plan shall be paid immediately upon maturity of the contract
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The planholder may institute necessary legal action in court to recover his or her investment in the pre-need company
Pre-need Code of the Philippines or Republic Act No. 9829 provides that no pre-need company shall refuse, without just cause, to pay or settle claims arising under coverages provided by its plans nor shall any such company engage in unfair claim settlement practices.
What are the acts by a pre-need company, if committed without just cause, shall constitute unfair claims settlement practices?
The law says:
Any of the following acts by a pre-need company, if committed without just cause, shall constitute unfair claims settlement practices:
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Knowingly misrepresenting to claimants pertinent facts or plan provisions relating to coverages at issue;
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Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its plan;
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Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its plan;
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Failing to provide prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; or
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Compelling planholders to institute suits or recover amounts due under its plan by offering, without justifiable reason, substantially less than the amounts ultimately recovered in suits brought by them.
How should the proceeds of the plan be paid?
The law says:
In the case of scheduled benefit plans, the proceeds of the plan shall be paid immediately upon maturity of the contract, unless such proceeds are made payable in installments or as an annuity, in which case the installments or annuities shall be paid as they become due.
Refusal or failure to pay the claim within fifteen (15) days from maturity or due date will entitle the beneficiary to collect interest on the proceeds of the plan for the duration of the delay at the rate twice the legal interest unless such failure or refusal to pay is based on the ground that the claim is fraudulent provided that the planholder has duly complied with the documentary requirements of the pre-need company.
In the case of contingent benefit plans, the benefits shall be paid by the pre-need company thirty (30) days upon submission of all necessary documents.
Take note that the planholder may institute the necessary legal action in court to recover his or her investment in the pre-need company thirty (30) days upon submission of all necessary documents. However, in the insolvency or bankruptcy is a mere cover-up for fraud or illegality, the planholder may institute the legal action directly against the officers and/or controlling owners of the said pre-need company.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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